Flood Insurance: Still Trying to Reform the Reform

On December 13, 2013 another bill was introduced into the U.S. House of Representative that would delay the implementation of parts of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12). The bill’s full text is available here.

This bill, known as the “Flood Insurance Relief and Transparency Act of 2013,” is even more modest than the changes proposed in a previous bill altering the Biggert-Waters Flood Insurance Reform Act of 2012. This new bill would not change any of BW12’s rate increases for structures built prior to a communities first Flood Insurance Rate Maps or prior to December 31, 1974 (so-called “pre-FIRM” buildings). Instead, the bill would preserve the “grandfathering” of buildings built to conform to the elevation requirements of the FIRM current as of the building’s construction even if updated FIRMs increased the base flood elevation. With BW12’s eventual removal of this “grandfathering,” premiums would go up for buildings that were built to then-applicable NFIP elevation standards if Base Flood Elevations in a newer Flood Insurance Rate Map (FIRM) increased the Base Flood Elevation. A similar provision was in the earlier Congressional bill introduced in late October of 2013.

The December 2013 bill would also amend the NFIP to allow certain policy holders to make monthly payments for flood insurance, rather than yearly payments, under certain circumstances.

Again, as important as what this bill would do is what it would not do: It would not slow or stop rate increases for any “pre-FIRM” buildings that are subject to rates increases under BW12. Pre-FIRM buildings will see rate increases under BW12 if their policy has lapsed since July 6, 2012, they have been substantially damaged or improved since July 6, 2012, they have experienced severe repetitive loss, they have a new NFIP policy or have been sold since July 6, 2012. More detailed information on the impacts of BW12 are available here.